I’m the Washington D.C. bureau chief for Forbes and have worked in the bureau for more than two decades. I've spent much of that time reporting about taxes -- tax policy, tax planning, tax shelters and tax evasion. These days, I also edit the personal finance coverage in Forbes magazine and coordinate outside tax, retirement and personal finance contributors to Forbes.com. You can email me at jnovack@forbes.com and follow me on Twitter @janetnovack.

With talk of the fiscal cliff and tax hikes for the rich dominating the news, you might be worrying about how much you’ll really get to keep after you win tonight’s record-setting Powerball jackpot. (Update: With frenzied ticket buying continuing, early Wednesday afternoon the Multi-State Lottery Association estimated the top prize will be worth at least $550 million, up from yesterday’s $500 million estimate. And it could go still higher.)

The answer, as I explained last August when the Powerball jackpot hit $337 million, and last March when the Mega Millions jackpot hit a record $656 million, depends on which of the 44 participating jurisdictions you buy your winning ticket in; where you live; whether you claim your money in a lump sum or take it as an annuity; and should you make the annuity choice, what happens to tax rates in the future.

If you read the fine print at the Powerball site, you’ll see that you only get the full $500$550 million million if you’re the only player to match all six balls and you agree to take the payout in 30 inflation adjusted payments over 29 years. If you’re the sole winner and want all your money now, you’ll get a $327.4 $360.2 million payout—which would still qualify as the largest single lottery payout in U.S. history, since the $656 million Mega Millions jackpot was split among three winning tickets.

Of course we don’t know where tax rates are headed after Dec. 31. If President Barack Obama and the Democrats have their way, the Bush tax cuts for the wealthiest will expire and the top federal individual income tax rate will revert from today’s 35% to the 39.6% in effect under President Bill Clinton. Republicans, for their part, insist that the top rate shouldn’t rise—and could even be reduced by a tax reform that limits deductions.

So let’s assume you’re the only winner and are happier gambling on lotteries than tax policy. That means taking the $327 $360 million lump sum in 2012. Of the 44 jurisdictions (including 42 states, the District of Columbia and the Virgin Islands) now participating in Powerball, six—Florida, New Hampshire, Tennessee, Texas, South Dakota and Washington —don’t have a state income tax and a seventh, Pennsylvania, exempts lottery winnings from its tax. (Delaware used to exempt winnings, but no longer does.) If you’re a resident of one of those seven states and the sole winner, you can hand over 35%—the current top rate– to Uncle Sam and be done with it. That leaves roughly $213$234 million for you, assuming you don’t want to make any big gifts to charity (more on that later.)

To many readers, this might sound wrong, since only 25% is withheld from the winner’s check for federal tax. (That’s assuming the winner supplies a Social Security number. The IRS requires 28% withholding if you don’t provide a valid tax ID.) But 35% is the top federal rate in 2012 on ordinary income, such as wages, and gambling winnings are taxed as ordinary income. Moreover, both you and the Internal Revenue Service will receive a Form W-2G reporting your full winnings. So set aside some cash above the amount withheld to pay that extra tax, unless you want the IRS’ to start attaching your bank accounts. (Forget about hiding the money in Switzerland; that game is over.)

As for state and local tax, looking at only participating states, New York City residents take the biggest tax hit; they pay an 8.82% top state tax on income over $2 million per couple and a 3.88% city levy on income over $500,000, for a combined top 12.7% rate. Their only consolation: State and local taxes are deductible from federal taxable income, which reduces the combined federal/state/local share to around 43%, and leaves about $187$205 million for the winner to pocket.

California doesn’t participate in the Powerball, but if you’re a California resident who buys the winning ticket while travelling, you’ll end up paying slightly higher taxes than a New York City resident would. In November, California voters passed Proposition 30, which set a new, highest-in-the-nation tax on income of $1 million plus of 13.3% (up from 10.3%) retroactive to January 1, 2012. True, California exempts winnings from its own state lotteries from tax. But it does tax winnings from other states’ lotteries. (Fair? Nope. But that’s what the state’s tax form here, says. See the explanation of Line 21, Other Income. So don’t complain to me; write to California Gov. Jerry Brown.)

What if a resident of a state without an income tax picks up his ticket while visiting the Big Apple? New York states in Publication 140-W that the winnings on any tickets bought in a lottery run by the New York State Division of Lottery—and that includes Powerball—are New York state source income, taxable by New York, whether you are a resident or not. If you bought the ticket in New York, the state will take its cut out before paying you your winnings. That means, for example, if you’re a Pennsylvania resident who works in New York (as some do) you should never buy your tickets at work. Instead, buy them at your home in Pennsylvania, since it doesn’t tax lottery winnings. (New York City does not have a tax on nonresidents. So if you aren’t a resident of the city and happen to buy your ticket while visiting the Big Apple, you won’t have to pay the extra 3.88%. What is unclear, however, is if a New York City resident who wins a big jackpot can move from the city, take annuity payments, and avoid the city tax on them; tax experts says the city might assert that it still has a right to its cut, since the winner was a resident at the time of his big score.)

Suppose you plan to give most of your winnings to charity? Can you escape taxes that way? Not entirely. As Robert Wood explains here, deductions for charitable contributions are usually limited to 50% of your income and in some cases less. So if you collect $327$360 million this year and give away megabucks later, you may never get to use all your deductions. That means, if you’re serious about philanthropy, you should take the payout over 29 years and make your gifts over time, as you build up knowledge about the causes and charities you’re funding—the way billionaire Microsoft founder Bill Gates and his wife Melinda have done. (For the 100 largest U.S. charities, click here.)

Meanwhile, if you plan to share your good fortune with your family, think about spreading the wealth quickly. Under current law, you can give up to $5.12 million to recipients other than a spouse before you’re subject to the 35% federal gift tax. A couple can give away $10.24 million. But unless a political deal is cut, that exemption will fall to just $1 million on January 1. (Note: You can make annual tax-free gifts of up to $13,000 in 2012 or $14,000 in 2013 to as many individuals as you want, without it counting against your exemption.) Fortunately, only Connecticut has a gift tax, but 21 states and the District of Columbia do impose inheritance or estate taxes. So if you live in one of them, giving away money to your family while you’re alive could save a tidy amount in state estate tax. (For advice on making gifts before year end, click here.)

Finally, all this tax talk raises the question of whether it’s really worth playing the lottery if Uncle Sam and your state are going to take back so much of your winnings. To answer that, consider what legendary investor Warren Buffett, the nation’s second richest man, had to say in hisNew York Times opinion piece this week calling for a minimum tax on the wealthy. Buffet claimed he’s never heard an investor turn down a good idea because the taxes on his gain would be too high.

Are lottery tickets a good investment? Not really. But it’s fair to say, that if you’re ready to blow a whole $2 on the 175 million-t0-one odds of picking the right six numbers, you shouldn’t let a 35% or a 43% tax bite stop you. (For dozens of ideas on what is a good investment, see the new Forbes 2013 Investment Guide.)

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If you have nothing to start with other than $2 in tickets, does it really matter what you pay in taxes? People waste 2-3 times that on a cup of coffee! It is a good chance and without a ticket no chance, unless I win and your one of my relatives! lol